Efficiency Measures in the Agricultural Sector: The Beginning

agricultural productivity is often based on non-parametric models (DEA), or stochastic models (SFA). In this initial article, the editors start by pointing that the models (DEA and SFA) allow estimating the efficiency of the production frontier and their structural forms. Then, it is presented, in general terms, the differences between DEA and SFA models: DEA model involves the use of technical linear programming to construct a non-parametric piecewise surface, and SFA models comprise econometric models with a random variable, or an error term, including two components: one to account for random effects and another to take care of the technical inefficiency effects. Finally, it shows a comparison between the two approaches (SFA and DEA) and the advantages and disadvantages of their utilizations

Technical Efficiency in Australian Textile and Clothing Firms: Evidence From the Business Longitudinal Survey

This paper estimates technical efficiency of Australian textile and clothing firms based on the data obtained from the Business Longitudinal Survey (BLS) conducted by the Australian Bureau of Statistics (ABS). Using a Cobb Douglas stochastic production frontier the paper examines firm level technical efficiency in the time varying inefficiency effect model with technical inefficiency effects assumed as an independently distributed truncated normal variable. Estimates of the production frontier revealed significant but small elasticities of labour and capital for textile and clothing firms, respectively, and a negative (but insignificant) Hicks neutral technical change for both. Estimated coefficients of the explanatory variables for inefficiency effects indicated that technical efficiency varied significantly according to firms' age, size, capital intensity, proportion of non-production to total workers and type of legal status. Predicted firm specific efficiency varied from 16 per cent to 95 per cent and mean efficiency ranged between 30 to 70 per cent. In view of these results policies have been suggested to improve technical efficiency of the firms as well as productivity growth of the sub sectors. Copyright Blackwell Publishing Ltd/University of Adelaide and Flinders University of South Australia 2004.